HTP of Anaheim Agrees to Retool Audio Products Under Patent Suit Accord

HTP International Inc., which continues to sort out charges that it overstated sales by $9.3 million, said Thursday that it settled a patent infringement case over wireless speakers and headphones.

The home entertainment furniture maker and a subsidiary, Chase Technologies Inc., acknowledged that they infringed on a patent held by industry leader Recoton Corp., but all three companies said in a prepared statement that the infringement was “accidental.”

Peter Holmes, a lawyer for HTP, said a confidentiality clause in Thursday’s settlement prohibited him from revealing whether the Anaheim company agreed to pay any damages.

HTP had sued in federal court in Los Angeles last May to invalidate Recoton’s patent and packaging rights, and the Lake Mary, Fla., company sued for infringement. Under the settlement, HTP agreed to withdraw its claim.

HTP said it notified Recoton that it planned to begin shipping re-engineered products with revised packaging that does not infringe on Recoton’s rights.

HTP, formerly known as Home Theater Products International, was rocked in September when its outside auditor resigned, citing “significant weaknesses” in its internal controls and concerns about “management integrity.”

The auditor, Jaak “Jack” Olesk of Beverly Hills, also withdrew his certification for the previous three years of audits, which forced the company to be delisted from the Nasdaq exchange.

When challenged by HTP’s then-Chairman Paul Safronchik, Olesk said the company booked at least $9.3 million in nonexistent sales and wanted to post a profit of $4 million when it actually lost $5 million for its fiscal year, which ended June 30.

The company has since brought in a forensic accounting firm to reconstruct accounting records, a process that continues, and has acknowledged that sales were overstated by an unknown amount.